This is the second in a two-part article on expanding your client base into the next generation of younger clients, by accessing the children of your clients. In last month’s article we looked at how you might build links with these younger potential clients. In this second instalment, we’re going to consider some of the specific ways in which you might treat this younger cohort, in order for them to fully engage with you and to become long-term clients.

Tweak your proposition

If your proposition is all about managing assets, this is not going to resonate with these younger clients – because they often don’t have any! However what they do probably have is significant income growth potential and the ability to build an asset pool in the future. If you want your proposition to engage them, it needs to clearly reflect these factors and how you are going to help them grow and protect their wealth with these factors (low assets, high income potential) in mind. It may mean smaller steps than you usually take with clients, but with a significant end goal in sight for you of helping them grow appropriately over the long term, with you there guiding them on their journey.

Lifestyle planning is relevant

Quite often advisors will say that lifestyle financial planning (and cashflow planning in particular) just doesn’t really engage younger clients. I strongly disagree with this… How you position lifestyle financial planning is the key here and also how you charge for it will be an important factor (see the final point below). The reason it is so relevant is that younger people tend to have heads full of future dreams, goals and ambitions, more so than older people where life has become a little more settled and simple. Younger people have no sense though of how achievable their dreams are, or what they need to do to bring them to reality. That’s where your skills as a lifestyle financial planner come in.

Targeted communication is a must

Producing regular and engaging communications for your clients is a significant challenge. However you’ll need to accept that it’s going to become even more of a challenge as you build up a cohort of younger clients. Sending “one size fits all” content to your younger clients that you use to engage your clients in their 50’s and 60’s just won’t wash – your younger clients won’t be able to relate to it.

You will need to alter your communication approach with your younger clients, by developing separate content that connects with them and their specific challenges at their stage in life. It’s definitely more effort, but worth it in the long run.

Look at the profile of your team

Something that we see time and time again is that most client bases tend to generally reflect the adviser in terms of age and other demographics. Potential clients tend to gravitate to people that they can easily connect with, who appear to be “like them”. This is something you need to carefully consider with younger clients. If you’re 20+ years older than your target younger clients, are they really going to connect with you? Or will they feel more comfortable with a younger adviser who they can easily relate to, and who will be with them over their full financial journey. If you have younger members within your advice team, maybe you should hand all of these younger clients over to them? If not, is it time to go out and hire a younger adviser, if you are really serious about expanding your client base among younger clients?

Consider an alternative pricing model

This is a significant headache for advisers… how to make this segment viable, particularly as asset levels are low or non-existent. Unfortunately the answer here is that you may need to take a bit of a bet here with these clients. A trail commission basis won’t work for you and these clients may well baulk at / not see sufficient value in a standard retainer or fee arrangement. So you may need to review your proposition to a “lite” version at a lower cost, with a view to increasing the services and your fees as the years progress. This is a tough one to get right, but can be achieved with careful planning and execution. The payoff will be down the road.

Building bridges to the next generation is a significant challenge, both in terms of attracting them and then delivering a proposition that engages them. However if you do this well, it will add significant long term value to your business.

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